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By Nitesh Shah, Director, Research<\/strong><\/p>\n Although cocoa is a key ingredient, it is not the only ingredient in an Easter egg. More of an egg\u2019s cost is likely driven by marketing and distribution costs than the ingredients itself. A depreciating Sterling is also likely to have driven the price of ingredients higher in local currency terms.<\/p>\n Cocoa supply and demand<\/strong><\/p>\n The International Cocoa Organization (ICCO) expects a 3.2% increase in 2018\/19 production of cocoa.<\/p>\n The 2018\/2019 season is now largely complete, but final data is still not available. Grindings are also rising, which will leave the stocks-to-grinding ratio roughly flat at 37.6%.<\/p>\n According to the ICCO, C\u00f4te d\u2019Ivoire, the world\u2019s largest producer is about to top its record cocoa production established during the 2016\/17 crop year at 2.020 million tonnes.<\/p>\n But that failed to pull cocoa prices significantly lower because in February 2019 concerns over above-average temperatures and fears of Harmattan winds (dry desert winds) in West Africa tempered market expectations of any upside production surprises.<\/strong><\/p>\n What about el Ni\u00f1o?<\/strong><\/p>\n We are currently in an El Ni\u00f1o weather event, which has historically been positive for cocoa prices.<\/p>\n However, the event is too weak to have noticeable weather impacts in West Africa (the largest producing area).<\/p>\n As we enter the mid-season crop harvest period in May, we expect less price volatility than we have seen in recent months, given the smaller scale of the crop (the mid-season crop is 15-20% of the total).<\/p>\n
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